Candlestick Charting Demystified

Chapter 2

Candlestick Charting in Technical Analysis

Technical analysis is the study of price movement. While the study of price movement has been done for centuries, technical analysis in its modern form (referred to as Western technical analysis) has its roots in the writings of Charles Dow around the turn of the twentieth century. Dow’s writings led directly to the development of Dow Theory, which uses price movements in the Dow Jones Industrial Average in conjunction with price movement in the Dow Jones Transportation Average to determine whether the stock market as a whole is likely to move higher or lower. While Dow Theory was developed when railroads were the main form of transportation, its premise that the health of the transportation ...